Welcome back to The Legacy Brief.

Heirly’s monthly dispatch on the North American business acquisition market. Data-backed, and worth your time. Here is what we are watching this month.

The Market Pulse

$2.8 million is roughly the acquisition debt a business with $500,000 of cash flow could support in August, on a 10-year loan backed by the Small Business Administration in the United States at prime plus 2.75%, at the minimum its rules allowed. Today the figure is about $2.55 million, 9% less. Two changes, two weeks apart, produced the gap.

On September 16 the Federal Reserve raised its target range to 3.75% to 4.00% by a 12 to 0 vote, its first increase in more than three years. Major banks moved prime, the benchmark most of these loans are priced from, from 6.75% to 7.00% the next morning.

On October 1 the agency’s new lending manual took effect. A business changing hands to a new owner must now cover its debt payments 1.25 times, up from 1.15, on past earnings, not projections.

The rate rise explains about 1 point of that 9% drop. The coverage rule explains 8. The headline went to the Fed. The rule did the work. Lenders already underwriting above the minimum will see less change.

For an owner, that gap of about $250,000 does not disappear. It moves into the buyer’s own cash or into the terms of the offer.

Larger deals had a different month. Completed deals above US$100 million were worth 23.9% more through September than a year earlier, and 43% of third-quarter deals closed within 70 days of announcement, up from 35%.

In Canada the month’s signal came from owners themselves. Small business confidence fell nearly 10 points in September to 47.9, below the 50 mark where owners expecting a weaker year outnumber those expecting a stronger one. The economy lost 68,000 jobs the same month, a second straight decline.

Interest from buyers has not gone anywhere. New search funds, vehicles for individuals buying one company to run, launched at historically high levels in 2024 and 2025 in the United States and Canada combined. What changed this month is the structure of an offer, not the appetite behind it. That makes who the buyer is matter as much as the number they put forward.

What We Are Watching

October 28 brings two decisions in one day. The Bank of Canada, holding at 2.25%, announces at 9:45 a.m. Eastern and the Federal Reserve that afternoon. In September, 16 of 18 Federal Reserve officials projected a higher rate by year-end, and a further quarter point would likely take prime to 7.25%. The Bank of Canada must weigh small firms’ plans to raise prices by an average of 3.3%, up from 2.6% a month earlier, against two months of job losses.

In late November the next quarterly survey of brokers and advisors is expected to show whether time to close, 11.5 months for $2 million to $5 million deals in the second quarter, kept lengthening.

Sources: Bank of Canada, 2026 schedule | Federal Reserve, Summary of Economic Projections, September 16, 2026 | Canadian Federation of Independent Business, September 24, 2026 | International Business Brokers Association and M&A Source, Market Pulse Q2 2026

The Question

This month we asked: what do owners wish they had negotiated besides the price?

“How much of the price arrives on closing day.”

Sellers received between 83% and 92% of their proceeds in cash at closing in the most recent quarterly survey of advisors. The rest arrives later, on terms. In the United States, a note the owner carries that counts toward the buyer’s required down payment on a Small Business Administration loan pays no principal and no interest for the life of that loan, typically 10 years. An owner asked to carry part of the price should know which kind of note he is signing.

“What ‘profit’ means once someone else keeps the books.”

An earnout pays the seller more if the business performs after the sale. Two parties acting in good faith can still read the same clause differently when the measure is profit, because the new owner decides what is spent. The measures that hold up are those the seller can check from outside, such as revenue or retained customers, with a definition agreed before signing. Earnouts are not permitted in purchases financed with a Small Business Administration loan, so they appear in deals funded other ways.

“The job you are accepting on the day you sell.”

The transition is a term of the deal. How long the owner stays, what authority he keeps and how employees and customers hear the news are easier to settle before closing than after. In the United States a seller who exits fully may now consult for up to 24 months.

A Note From Toyin

Small Business Week begins in Canada on October 19. It is a week for celebrating what owners have built, and a good moment to take stock.

What stays with me from this month’s numbers is that none of them question whether a good business is wanted. It is. The questions have moved to who the buyer is, and on what terms.

If a sale is somewhere in your plans, knowing what your business is worth today, and what would raise it, is a calm place to begin.